This episode contains segments on an implementation plan for piloting the comprehensive reform of Shanghai’s Pudong New Area; on 2023 profits at China’s larger industrial firms; on China’s official manufacturing purchasing managers’ index in January 2024 and on a quarterly report by the National Institution for Finance and Development on China’s macro leverage ratio. From the Chamber’s side, on 24th January, the European Chamber co-hosted the first EU-Guangzhou Business Dialogue, which it organised jointly with Guangzhou Municipal Bureau of Commerce and Huangpu District Government of Guangzhou focussing on addressing issues related to the city’s most recent policies for foreign companies, as well as challenges faced by the Chamber’s member companies operating in the Greater Bay Area.
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Implementation Plan for the Comprehensive Reform Pilot of Pudong New Area (2023-2027)
China 2023 industrial profits
China January official PMI
NIFD report on China’s 2023 macro leverage ratio
1st EU-Guangzhou Business Dialogue
XINHE: Hello and welcome to China Shortcuts,
XINHE: On 22nd January, China’s State Council and the Central Committee of Chinese Communist Party jointly released an implementation plan for piloting the comprehensive reform of Shanghai’s Pudong New Area.
MARIANN: The plan aims to promote further reform and opening up. Under the framework of the pilot, digital yuan payments will be trialled in several areas, including e-commerce, carbon and green electricity trading. The plan also includes measures to support innovation, intellectual property protection and talent development.
XINHE: Commenting on the plan’s release is Carlo D’Andrea, vice president of the European Chamber and chair of the Chamber’s Shanghai Chapter:
CARLO D’ANDREA: The Shanghai Chapter welcomes the release of the Pudong pilot plan as it grants Shanghai more autonomy to explore its options for further opening-up of sectors including telecommunications, financial services and healthcare. However, in order to assess its potential impact, businesses need to see a clear roadmap on how the pilot plan will be implemented. We therefore would request that the government releases a detailed plan specifying the approach to be taken as well as the timeline. For its part, the European Chamber’s Shanghai Chapter will actively engage with the local authorities and provide members’ feedback and constructive recommendations based on the good cooperation and regular exchange that we have maintained with the Pudong authorities over the years.
XINHE: According to data released by the National Bureau of Statistics on 27th January, profits at China’s larger industrial firms dropped 2.3 per cent in 2023 compared to the previous year.
MARIANN: The year-end data showed the lowest rate of decrease all year, with the fall in industrial profits slowing month by month from a 22.9 per cent year-on-year drop recorded in February. A breakdown by ownership structure showed that equity-owned companies made the most profits last year in absolute terms, while foreign-owned enterprises made the least, with their profits also falling at the steepest rate. Privately-owned industrial firms were the only ones recording a year-on-year increase in their profits. The statistics bureau’s statement also revealed that foreign-invested companies were the only category that also experienced a year-on-year drop in their operating income.
XINHE: Manufacturing activity in China contracted for the fourth consecutive month in January, while services growth gained some momentum.
MARIANN: The official manufacturing purchasing managers’ index or PMI stayed below the 50-point benchmark separating growth from contraction, despite rising slightly from December. While production expanded further compared to the previous month, demand remained weak, which in turn led to more layoffs at manufacturing firms.
The non-manufacturing PMI indicated that growth in the sector accelerated to the highest pace since September, as services activity climbed just above the 50-point benchmark after two months of contraction.
MARIANN: In its quarterly report, released on 25th January, the institution said that the level of total debt in the real economy, that is in the corporate and residential sectors, remained relatively low, increasing less than 10 per cent year-on-year. However, the slowdown in nominal economic growth resulted in a sharp rise of the country’s macro leverage ratio, which is the ratio of total debt to GDP in the real economy. The ratio surpassed 280 per cent, climbing 13.5 per cent from 2022.
At the same time, the government’s leverage ratio also increased, with government debt growing 15.7 per cent from 2022 – faster than in the previous two years and surpassing the growth rate of household and corporate debt.
XINHE: On 24th January, the European Chamber co-hosted the first EU-Guangzhou Business Dialogue, which it organised jointly with Guangzhou Municipal Bureau of Commerce and Huangpu District Government of Guangzhou
MARIANN: The event focussed on addressing issues related to the city’s most recent policies for foreign companies, as well as challenges faced by the Chamber’s member companies operating in the Greater Bay Area.
XINHE: The event was attended by over 100 participants, including representatives from more than 70 European firms, the European Union’s Delegation in China, consuls generals from EU member states, as well as officials from various local government departments.
MARIANN: Thanks for listening, and don’t forget to tune in again next week!
XINHE: In the meantime, please find useful links in the episode notes.